How to Record SCA Wage Determination Backpay
Records the liability and expense for retroactive wage adjustments required by a new Service Contract Act (SCA) wage determination.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Direct Labor - Service Contracts | Asset/Expense | 15,000.00 | - |
| Fringe Benefits - Payroll Taxes | Expense | 1,147.50 | - |
| Accrued Payroll Liability | Liability | - | 16,147.50 |
💡 Accountant's Note
When a new SCA wage determination is issued and applied retroactively via contract modification, the contractor must record the backpay owed to employees along with associated payroll taxes.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a unique pay code in the payroll system to track retroactive payments separately from current period earnings.
⚠️ Audit Flags
DCAA audits of labor charging and payroll records to ensure backpay matches the wage determination rates.
📄 Required Documentation
Contract modification, updated wage determination schedule, and payroll calculation worksheets.
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